Harris Companies — Leading through innovative and responsible solutions

 

BY JOHN MESENBRINK,

chief editor

 

Phc News is proud to announce its 2009 Contractor of the Year — Harris Companies, St. Paul, Minn. This forward-thinking company was chosen based on its dedication to the environment with its sustainable design principles and LEED-involvement programs, and successful commercial projects such as work completed at the TCF Stadium/University of Minnesota, Minneapolis, and St. Joseph’s Hospital, St. Paul. And what caught the eye of the Phc News editors was work completed at a Geo-Exchange project in St. Cloud, Minn. earlier this year.

 

In a time of tight budgets and soaring energy costs, the St. Cloud Municipal Athletic Center (MAC) found a way to go “green” and save taxpayer dollars in the process. With the installation of a new Geo-Exchange system, the MAC uses the earth to maintain the arena ice and heat their facility. By installing this sustainable technology, the MAC will save enough electricity to power over 30 homes, enough gas to heat over 80 homes and reduce greenhouse gas emissions by an amount equal to the removal of more than 100 cars from the road each year.

 

Inside the business

 

With an approximate estimated services breakdown of plumbing — 20%, hydronics — 20%, piping — 20%, sheetmetal — 35%, and service — 5%, Harris Companies defines its strategic anchors as: large and technically complex projects; projects with a value based selection process; and projects with its existing customers.

 

These anchors tend to focus the company on the health care, mission critical, institutional, industrial and commercial markets. Diversity is one piece of the Harris plan that has served it well over the years.

Phc News was fortunate enough to conduct an exclusive interview with Greg Hosch, president and ceo of Harris Companies.

 

Phc: Please provide a brief history of the company.

 

Hosch: Founded in 1948 by Charles Harris, Harris Plumbing & Heating has grown from its humble beginnings into what it is today — a respected mechanical contractor that provides the best possible service to its customers. We design, build, install, control and maintain piping, plumbing, heating, ventilating and air conditioning systems for a variety of health care, institutional, industrial and commercial customers.

 

In 1983, the company was purchased by a group of long-term employees. While the ownership group has evolved and grown over time, we have retained the same ownership structure. Harris Companies, a Minnesota Corporation, is an employee-owned organization with 36 shareholders. We believe an organization that is employee-owned and shares its ownership beyond just a few individuals is more focused on long-term client satisfaction. It is one of the key points that distinguishes us in the marketplace.

 

Phc: How did you get involved in the industry & with the company?

 

Hosch: My father, Bob Hosch, and a group of other long-term employees purchased Harris from Ron Harris and Shelly Stewart in 1983. Bob was obviously instrumental in getting me interested in the business. I joined the firm in January of 1993 as a project engineer after graduating from Iowa State.

 

Phc: What are your initiatives for the company?

 

Hosch: Our core purpose is “Leadership through Innovative and Responsible Solutions.” What flows from this is a vision of becoming a nationally branded, top-10 mechanical contractor that is recognized for having the resources and capabilities to effectively serve our customers wherever they might travel. We are recognized as a leader in the market place for our creativity and the ability to provide solutions to our customers that maximize long-term value in a reliable and sustainable way.

 

This vision and purpose has led to several initiatives over the years. We stay focused on a selected few. We believe it is better to make a lot of progress on a few goals verses little or none on many.

 

Certainly when people think “Responsible” they think sustainable, and that is a cornerstone of our organization. Maintaining a leadership role in the sustainable market is an initiative that has grown out of our vision.

 

Another initiative has been growth. We do not expect much of this to happen in the Twin Cities; it’s a very mature marketplace. Our growth will come through new market geographies and new market sectors. This is the strategy that led us to Utah and Phoenix. It will lead us to look at other strategic opportunities in the future, likely resulting in acquisitions in targeted regions.

 

Part of being an innovative leader in today’s market place is Building Information Modeling (bim). Growing our capabilities in bim has been critical both for project success, and for creating more opportunities for prefabrication. It dovetails nicely with our expanding geographic reach, giving us more control over field installation processes that are generally harder to control the farther away you get from your office.

Phc: Ranked 17th on Phc News’ Top 100 contractors list for 2009, you must be doing it the right way. Has the economy forced Harris to shift business strategies, and how are you dealing with this particularly hard time?

 

Hosch: We have seen the commercial developer market virtually disappear, the academic market reduce their construction programs, and the health care market freeze projects as we wait to see what comes out of Washington.

Generally we will see a revenue decline this year, likely around 12%. Though this isn’t as significant a revenue decline as some contractors are facing, taking 12% off the top line certainly has an effect. We have focused internally on cost reduction and cash retention.

 

Tactically we have become more active pursuing Federal opportunities in new areas of the country, and traveling for large work that fits our strategic anchors. Fortunately, this effort to expand geographic reach began long before the economic downturn rather than in response to it. I believe our overall vision has helped to minimize the impact of the current market, and while it may have delayed some of our goals, they have not changed.

 

Phc: Please provide a successful project(s) of which you are most proud?

 

Hosch: Please see the following:

 

• TCF Stadium/University of Minnesota, Minneapolis; (see sidebar)

• St. Joseph’s Hospital, St. Paul;

• Otter Tail Ag Ethanol Plant, Fergus Falls, Minn.;

• Regents Hall of Natural and Mathematical Sciences Science Building/St. Olaf College, Northfield, Minn.;

• LDS Conference Center, Salt Lake City; and

• St. Joseph’s Church, Rosemount, Minn.

 

Phc: Headquartered in the northern Midwest, in the beautiful city of St. Paul, are there any project obstacles due to geography?

 

Hosch: We will travel anywhere with our clients. We have worked in over 20 states, Japan and Canada because our clients needed us. We also have expanded our geographic reach by establishing remote offices.

 

The Harris Companies family now consists of the following:

 

• Harris Mechanical, St. Paul, Minn.;

• Harris Controls, St. Paul, Minn.;

• Harris Service, St. Paul, Minn.;

• HiMEC, Rochester & Northfield, Minn.;

• Harris Mechanical Intermountain, Salt Lake City;

• Harris Mechanical Southwest Phoenix;

• Superior Air Handling, Clearfield, Utah and San Francisco;

• TRAK International, St. Paul, Minn. & Kelowna, B.C., Canada; and

• Midwest Fab and Supply, Zumbrota, Minn.

 

St. Paul is a great location to base travel out of. Our office is close to the airport (as are all our offices), and it is centrally located on a national basis.

 

Phc: How do your satellite offices help complete your business?

 

Hosch: Other offices allow us to provide very personal service to our clients. We can respond with a team quickly with the full support of the entire organization. A “symmetry” has developed that allows all of the Harris organization to support each other and our mission.

 

For example, we are completing the Topaz data center in Salt Lake City right now. The project lead came through Superior, the take-off was done in St. Paul, the estimate assembled in Salt Lake. The interview team involved individuals from St. Paul and Salt Lake. The BIM was done in both St. Paul and Clearfield, Utah. The project management team came from St. Paul, Clearfield and Salt Lake, and the fabrication came from Zumbrota, Minn. and Clearfield, Utah.

Since we manufacture much of our product, multiple fabrication facilities also allows us to better serve remote projects.

Having smaller, multiple offices all operating under common business practices allows us to leverage the resources of a larger company while maintaining the entrepreneurial essence and nimbleness of a smaller company.

 

Phc: How does Harris contribute to green building and sustainable design?

 

Hosch: Harris has contributed to the usgbc Mississippi Headwaters Chapter as a Gold Sponsor. We have encouraged our staff to become LEED Accredited Professionals and currently have more than 40 on staff.

 

We have assembled a group of professionals that focus on what we call Bundled Energy Solutions (bes). Essentially a bes project makes capital improvements to a customer’s facility, and pays for them through reductions in operating costs. Most of the reductions come from energy savings.

 

In late 2007 we also purchased a company in Canada, with the plan to market and install their innovative, central plant-based GeoExchange systems throughout North America. In fact, the St. Cloud Municipal Athletic Center was featured in your March 2009 issue.

 

Education is also a key component, and we regularly have internal presenters at our staff meetings speak to energy efficiency and share their experience on sustainable projects.

 

Notably our new fabrication facility in Zumbrota, Minn. was certified LEED Silver, and we have participated in many LEED certified projects both in Minnesota and abroad. One of the most recent was the St. Olaf Regents Hall of Natural and Mathematical Sciences, which just achieved LEED Platinum.

 

Phc: How important is it to the company to have so many LEED accredited officials. A pretty proud accomplishment, no?

 

Hosch: We are particularly proud of LEED AP team members, 44 currently. They each invested their own time to study and pass the exam because they believe in our goal of “innovative and responsible solutions.”

 

The LEED exam is not an easy test; it takes many hours of study and prep time. Pushing our team members to achieve LEED AP status demonstrates a commitment to green building. It was also a way to raise the level of awareness of green building within our organization and keep it top of mind for our team members.

 

Phc: Explain your relationships with your customers.

 

Hosch: Customers are the most important part of our business. We are dependent upon them for the survival of our company. Our relationship with our customers is one of trust, honesty and integrity.

 

Our customers consist of both general contractors and owners and occasionally other specialty contractors. Many times we find ourselves performing “campus” work for a large owner customer, e.g. Mayo or 3M.

 

We tend to develop deep and long-term relationships with our general contractor customers, often teaming with them or traveling to other parts of the country based on our mutual relationship.

 

Phc: Explain the dynamic with your employees.

 

Hosch: We have a surprisingly open and honest relationship with our employees. As a management team we try to err on the side of sharing too much information rather than too little. We believe that when people know where the company is headed, and how we are doing, they will make the right decisions on their own.

 

Phc: Where do you see Harris in the next five years? Are we seeing commercial mechanical contracting back on the rise?

 

Hosch: We see Harris as one of the top 10 mechanical contractors in the United States; this was part of a goal we established years ago, and we use the annual Phc News list as our success metric. We believe it will take a long, long time for the commercial construction market to return to the levels we have seen in the last couple of years, perhaps more than five. Regrettably we do not see it on the rise.  We see more of an emphasis on infrastructure projects, very large health care, sustainable construction and renewable energy, and federally funded projects.

Harris will continue to focus on our strategic plan. While it may be slowed a little, we believe the fundamentals are still sound.